(2009-03-22) Heilemann Obama Stimulus Reaction

John Heilemann on reaction to Barack Obama's Credit Crisis 2008 Bail-Out and Economic Stimulus plans so far.

But Tim Geithner offered precious little (on Feb10) that was specific and provided few details. Obama's raising of expectations would have been ill-advised under any circumstances. But these were not just any circumstances. "Tim and Barack might have been able to get away with 'Trust me on the details'--except that they were following Paulson, who asked to be trusted so many times and then changed directions that no one was going to trust any Treasury secretary on the details," remarks a senior executive at one of Wall Street's biggest banks. "And then here comes Tim and says, "Trust me on the details." Oy vey." What had happened was that Geithner, after weeks of working on the plan, changed his mind late in the game and decided to pursue a different path. Without time to craft fully the new strategy, he concluded that vagueness was preferable to providing details that might have to be altered later. One problem, though: Apparently no one told Obama.

When I was at the White House recently, I jokingly asked a senior Obama official if the team was having fun turning the country into a socialist state. "What are you talking about?" this official replied. "Business loves what we're doing!" Back in New York the following day, I related that story to a CEO pal of mine who is a big Obama backer. "What are they, smoking crack down there?" he replied. "Find me one CEO who likes what they're doing. Seriously, find me one!" It's fair to point out that a lot of CEOs are, you know, Republicans. But even the Democrats among them tend to be queasy about the Obama agenda.

"I heard (Obama budget director) Peter Orszag on TV saying health care is the biggest problem affecting the economy," says one Democratic CEO. "No, it's not. Right now, of the top ten things they should be focused on, it's like, No. 11; the first ten are the banks."

There are those who believe that the administration grasps the point perfectly well. That Nationalization is where it's headed, slowly but surely. That the stress tests are really just a backdoor way into temporary government ownership of the current zombie banks--a means of providing a sense of order, consistency, and due process necessary to make nationalization seem an empirically based act of last resort. Obama's economic advisers wave off such talk.

Last July, in his former Financial Times column, Larry Summers argued that the government should put FannieMae and FreddieMac into receivership, "conserving cash for the benefit of taxpayers."

With an agenda like this, it might be tempting for Obama to tilt toward a full-throated kind of left-leaning Populism--especially at moment when populist ire in all its incarnations is plainly in the ascendancy. Some of Obama's political people, including his senior adviser, David Axelrod, certainly have inclinations in this direction, and are plainly worried that the populist ascendancy might threaten to derail his agenda unless he co-opts it. But honest-to-Betsy populism neither suits Obama temperamentally nor would serve his interests. In a time of profound economic paroxysm, Obama needs the private sector on his side. He needs its energies, its productive capacities, its ideas, its support. Government can help prevent the economy from spiraling down the drain, but only the engines of commerce and entrepreneurship can power it to full and lasting recovery. The balancing act that Obama must therefore pull off is a hell of a party trick. He must court the elites without pissing off the masses and soothe and provide catharsis for the masses without alienating the elites. Boy I hate that use of the term "elite". Andersen putting BigCo CEO-s in the same bucket as Entrepreneur-s: I'd say Obama makes the same mistake.